Weekly Feed Market Commentary
Published 29 October 14
Nov-14 UK feed wheat futures continued on an upward trend for the most part of last week, gaining £4.50/t between Monday and Thursday (23 Oct), but closing down at £119.80/t on Friday. This week, prices have climbed again, closing at £121.40/t on Tuesday (29 Oct).
In the global grain markets, there was a similar loss of momentum to the price rally at the end of last week for Chicago maize and wheat. However, both futures prices are up again this week, with Dec-14 Chicago maize closing at $143.50/t on Tuesday, up by $3.35/t on the week; and Dec-14 Chicago wheat closing at $195.00/t on Tuesday, an increase of $4.23/t on the previous week.
Bullish factors, including slow harvest progress in the US, dry weather in Australia, and increased exports from the EU are said to have triggered the price rally. In addition, there is the suggestion that short covering has contributed to the rally.
Russia’s wheat harvest may fall between 15% and 20% in 2015, according to local analysts SovEcon. Dry growing conditions have resulted in doubt over part of next year’s crop, as crop establishment of autumn planting appears to have been weak. The depreciating rouble, which has fallen 17% over the past three months, is also having an effect as input costs are increasing, and the option to re-seed areas lost over winter is becoming an increasingly expensive option.
Reports have shown that Ukraine harvested 88% of their planted grain area in 2014, resulting in only 12% of the area lost to abandonment. Yields averaged 4.04t/ha, higher in comparison with the previous year’s average of 3.68t/ha.
The latest EU MARS Bulletin forecast the average EU maize yield at 7.59t/ha, up 12.5% on 2013/14, and 11.8% higher than the previous 5-year average. Although rainfall in some parts has hindered harvest progress, this has not had an adverse impact on yields. So while it might be taking a bit longer than usual, the realisation of a record maize crop is getting closer.
Domestic oilseed prices reached two-month highs on Friday (24 Oct), with November delivered values into Erith reaching £255.00/t (up £0.50/t from the previous Friday). Nov-14 Paris rapeseed futures prices are also up on the week, by €7.75/t, closing at €328.00/t on Tuesday (28 Oct).
Rapemeal (34%, ex-mill, Erith, October delivery) was reported at £165.00/t on Friday (24 Oct), up £5.00/t on the previous week. The Hi-Pro soyameal price (ex-store, East Coast, October delivery) was reported at £337.00/t on Friday, up £19.00/t on the previous week and the first week-on-week increase in four weeks.
Oilseed values have taken support from strengthening in global markets, including dry conditions slowing soyabean planting in Brazil. However, the reality of big global production this season risks subduing prices, as the return of drier weather in the US should continue to be supportive of the soyabean harvest progress.
Figures and commentary provided in association with HGCA and BPEX.
For further information on the cereals market click here to link through to HGCA website.